HIGHLIGHTS-Bank of Korea Governor Lee's comments at news conference

Reuters Staff

3 Min Read

SEOUL, Feb 27 (Reuters) - The Bank of Korea left its key interest rate unchanged on Tuesday, as expected, taking note of muted inflationary pressure and showing caution ahead of any further monetary tightening from the U.S Federal Reserve’s policy meeting on March 20-21.

Following are key remarks from Bank of Korea Governor Lee Ju-yeol’s news conference, translated by Reuters:

RATE DECISION:

“Today’s decision to raise the base rate to 1.50 percent was unanimous.”

“We kept the base rate unchanged today as there is a need to closely examine growing protectionist measures and uncertainties abroad, although the local economy is expected to keep firm growth on the back of improvements in the global economy.”

“South Korea’s monetary policy is not decided automatically based on the monetary policy of the United States. Going forward, we will make our policy decisions comprehensively by looking at the economy, inflation and U.S. monetary policy.”

CAPITAL FLOWS:

“Even if interest rates in the United States grow higher than South Korea’s, I don’t see foreign capital outflows in the near term.”

“We have a substantial current account surplus as well as large foreign reserves...Also when looking at the foreign investors in our bonds, we have a high percentage of investors who are known for their long-term investments, like foreign central banks, sovereign funds and international institutions.”

DOMESTIC ECONOMY:

“When we translate (the GM issue) into numbers, I don’t think this issue warrants a change in our economic outlook.”

“In the case of the GM factory shutdown in Gunsan, the factory operation rate is already very low and the impact of the shutdown on our economy overall will be limited. For the regional economy, however, the impact will be big.”

“If the United States strengthens its protectionist policies, industries that see the biggest trade surpluses against the United States will be hit the hardest. For example, I think we can say the auto and steel industry would be representative of that.” (Reporting by Christine Kim; Editing by Eric Meijer)